Business cycles
Business cycles
Introduction
Business
cycles can be defined as the fluctuations in real GDP around potential GDP. But
why do they occur and how the real GDP keeps coming back to its potential
level? These are the main questions this learning object addresses.
The aim of this learning object is to introduce the economic mechanism within the economy through which macroeconomy can maintain stability in the long run but experience rough booms and downturns in the short run. Although the concepts aggregate demand and aggregate supply are used to explain this mechanism it is done through verbal reasoning and only some very simple graphs are used.
The learning object has been composed at Estonian Academy of Security Sciences by Indrek Saar for the course Basics of Economics.